Knight Frank experts reported on current trends in Russian commercial property as part of the annual MIPIM international commercial property show, held on March 8-11 in Cannes (France).
Knight Frank partner, Evgeny Semenov, took part in the closed session, “Investment climate in the regions – best practice for attracting and supporting investors,” which was organised by the Russian Ministry of Economic Development and REED MIDEM. Mr Semenov noted that “the Moscow office market remains the most promising for investment. But reduction of supply in Moscow will encourage investors to pay more attention to St. Petersburg. Other Russian regions are of limited interest at present.”
Retail assets are attractive for investment, but prices for quality projects are higher than in other segments, and this continues to limit transaction numbers in an environment where loan capital remains in short supply.
The most attractive segment is warehouse property in Moscow and Ekaterinburg. Both regions are seeing warehouse take-up rates much in excess of new supply, and this will lead to shortages and further increase of rental rates in both regions soon.
There has been a major increase of investment activity in the hotel segment. Attention remains focused on the Moscow market, but increasing interest in the St. Petersburg market is likely.
Knight Frank data suggest that total investments in Russian commercial real estate grew by 50% in 2010 compared with 2009 to a level of $4.4 billion. The upward trend should continue, ensuring growth of investment potential on the Moscow market and in several other Russian regions.
The Senior Vice-President of Knight Frank, Andrei Zakrevsky, took part as an expert in the round-table “Ready investment zones – the key to success in attracting investments”, which discussed industry parks in Russia.
Mr Zakrevsky also took part in MIPIM’s Russian Breakfast, organised by Impress Media with the support of Commercial Real Estate magazine.
The Knight Frank partner, Konstantin Romanov, was invited to take part as an expert in the MIPIM business programme on investing in Russia, “The Time is Now”, which was organised by Vedomosti newspaper.